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ENDORSEMENT SPLIT DOLLAR AGREEMENTS
AND AMENDMENTS THERETO WITH
MESSRS. BLAIR, NAUGHTON, SARGEANT,
FULLER, HOREY AND MEYER
[Form of individual Endorsement Split Dollar Agreements between the Company and Bryce Blair (dated January 16, 2003 for $2,500,000), Timothy J. Naughton (dated January 28, 2003 for $1,500,000), Thomas J. Sargeant (dated January 21, 2003 for $1,500,000), Samuel B. Fuller (dated January 23, 2003 for $1,500,000), Leo S. Horey (dated February 19, 2003 for $750,000), and Gilbert M. Meyer (February 5, 2003 for $2,500,000).]
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT is made as of the ___day of ___, 2003, between AvalonBay Communities, Inc. (the “Company”), and ___(the “Insured”).
_____________ (the “Insured”) is a valuable employee of the Company. The Company wishes to continue this employment relationship and, as an inducement thereto, is willing to participate with the Insured in the payment of premiums on certain life insurance policies as an additional form of compensation for the Insured’s services as an employee of the Company. This Agreement is intended to qualify as a life insurance employee benefit plan as described in Revenue Ruling 64-328.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1. GENERAL DEFINITIONS
The following terms shall have the meanings specified:
1.1. “ Company ” means AvalonBay Communities, Inc., or any successor thereto.
1.21. “ Insured ” means the Employee.
1.3. “ Insurer(s) ” means the insurance company or companies listed on Attachment 1 hereto.
1.4. “ Policy ” or “ Policies ” means the insurance policy or policies listed on Attachment I, issued on the life of the Insured by the Insurer(s), together with any supplementary contracts to such policies issued by the Insurer(s).
ARTICLE 2. PREMIUMS
2.1. Premium Payments . During the term of this Agreement, each annual premium on each Policy shall be paid as follows:
2.1.1. Insured’s Portion . During the term of this Agreement the Insured shall be obligated to pay a portion of each premium equal to the current term rate for the Insured’s age multiplied by the Insured’s current interest in the death benefit of such Policy. The “current term rate” shall mean the lesser of the Insurer’s term insurance rate or the PS 58 rate, as specified in Revenue Rulings 64-328 and 66-110, or any subsequently issued applicable authority. The Insured shall pay the Insured’s portion of the premium through payroll deduction.
2.1.2. Company’s Portion . During the term of this Agreement the Company shall pay any additional premium amounts not paid by the Insured that are required to meet the Company’s premium obligations to the Insured under the Plan.
2.2. Timing . The Insured’s portion of the premium and the Company’s portion of the premium shall be remitted to the Insurer before expiration of the grace period.
ARTICLE 3. POLICY OWNERSHIP AND INSURED’S BENEFITS
3.1. Company’s Interest . The Company shall be the sole and exclusive owner of each Policy and the direct beneficiary of an amount of the death proceeds of each Policy equal to the aggregate premiums paid by the Company under the Policy.
3.2. Insured’s Interest . The Insured shall have the right, during the term of this Agreement, to designate and change direct and contingent beneficiaries (and to elect and change a payment plan for such beneficiaries) with respect to the amount of the death proceeds of each Policy in excess of that payable to the Company pursuant to Section 3.1.
3.3. Payment from Insurer . Benefits may be paid under each Policy by the applicable Insurer either by separate checks to the parties entitled thereto, or by a joint check. In the latter instance, the Insured and the Company (and, if applicable, their respective beneficiaries) shall divide the benefits as provided herein.
ARTICLE 4. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the earlier to occur of the Insured’s termination of employment, the Insured’s failure to pay any amounts due under Section 2.1.1 of the Agreement, or the date mutually agreed to by the Company and the Insured. Upon termination of this Agreement, the Insured’s rights hereunder shall terminate.
ARTICLE 5. INSURER(S)
Each Insurer shall be bound only by the provisions of and endorsements on its Policy, and any payments made or actions taken by it in accordance therewith shall fully discharge it from all claims, suits and demands of all persons. The Insurer shall in no way be bound by or be deemed to have notice of the provisions of